With the ADX General index at its highest level since 2014, and with other Middle Eastern indices (such as the Tadawul All Share) at their highest level in years, many investors are wondering if the rise can continue, given the uncertainty surrounding global growth from the world’s leading economies. 

While the labor market has been improving in the United States, for instance, new jobless claims and unemployment rate are still quite elevated by historical standards, and the US economy created fewer jobs than anticipated last month as shown in the latest NFP report - not to mention that March gains were revised down. 

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These data triggered mixed sentiment among investors, as the American indices were reaching new highs. "With the S&P 500 making new highs every day, few seem worried… but rather than getting excited about [businesses] reopening, we are getting more concerned about execution risk and what's already priced in," Morgan Stanley equity analyst Michael J. Wilson said May 10. 

But concerns over Corona and other issues in the world are impacting the rise of most indices, including the Gulf and Middle East indices, which fluctuate depending on the latest developments, as this news might impact the outlook for global economic recovery and local economies. 

The uncertainty surrounding the capacity of countries to deal with uncertain economic recovery and longer-term consequences of the Covid-19 pandemic will likely trigger volatility in the coming days and weeks. These market movements can provide good trading opportunities for those watching the markets and are ready to profit from market movements, through reliable and regulated trading platforms including easyMarkets. Yet, traders need to be careful and use money and risk management tools to protect their trading capital from unpredictable events. 

Lockdown and other measures adopted to put an end to the spread of the Coronavirus have lowered the demand for oil, which is a key source of revenue for local economies. The reduced demand for energy, pushing oil prices down, has a strong impact on the economic growth of certain countries in the Gulf. 

“The market has no clear direction today though a new wave of restrictions to curb the pandemic in Asia is chilling the market mood,” said Satoru Yoshida, a commodity analyst with Rakuten Securities in a Reuters’ article. Different Indian states are considering new lockdown measures to help contain the Covid-19 infection, Singapore is about to close down many schools, and three Japanese prefectures are in a state of emergency. 

Still, there are some hopes that vaccination around the world will soon trigger higher demand for fuel, as travel might resume. Oil prices finished higher in April (+5.8%) in the hope of an uptick in global fuel demand. Many countries are doing all they can to bring the virus under control, hoping to open all activity sectors of the economy as quickly as possible, including tourism. 

Some countries in the Gulf are even considering lifting travel bans. For instance, the Saudi General Authority of Civil Aviation (GACA) declared that foreign visitors able to prove they’re fully vaccinated for Covid-19 would be able to enter the country without the need to quarantine.

(guest article) 

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